Tribune Saddled With Daunting Debt

New owner must repay $12 billion with declining revenues
By Heather McPherson,  Newser User
Posted Apr 4, 2007 8:53 AM CDT
Tribune Co. Accepts $8.2 Billion Buyout Offer    (Getty Images)
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(Newser) – Sam Zell 's bid for the Tribune Co. beat back his well-heeled rivals, but it saddled an already struggling enterprise with over $12 billion in debt. Now the Wall Street Journal wonders how he expects to pay it back. The likely annual interest fees alone will reach $1 billion, only slightly less than the company's entire annual cash flow.

Zell believes his creative ESOP tax structure and a more aggressive approach to the internet can sweeten his cumbersome deal, but the unavoidable truth is that ad sales took an industry-wide dive last summer, and no one expects them to return anytime soon—if ever. The Trib's own revenue dropped 4.3% from March '06 to March '07.